Amazon warehouse workers fight for unemployment benefits

CaptionPICTURES: In Amazon's Shadow

APRIL BARTHOLOMEW / THE MORNING CALL

Myrna Willis, worked at the Amazon.com's Breinigsville warehouse but lost her job for not keeping up with the pace. She fought Integrity Staffing Solutions for unemployment benefits, which she was later awarded. "Amazon is a great company, but the way they do things is wrong," she said.

Myrna Willis, worked at the Amazon.com's Breinigsville warehouse but lost her job for not keeping up with the pace. She fought Integrity Staffing Solutions for unemployment benefits, which she was later awarded. "Amazon is a great company, but the way they do things is wrong," she said. (APRIL BARTHOLOMEW / THE MORNING CALL)

Kenneth Hudson worked at Amazon.com's Breinigsville warehouse until, according to Integrity Staffing Solutions, he took voluntary leave. It wasn't voluntary, but mandated, Hudson argued when he successfully fought the temp agency for the unemployment benefits he had been denied.

Kenneth Hudson worked at Amazon.com's Breinigsville warehouse until, according to Integrity Staffing Solutions, he took voluntary leave. It wasn't voluntary, but mandated, Hudson argued when he successfully fought the temp agency for the unemployment benefits he had been denied. (APRIL BARTHOLOMEW / THE MORNING CALL)

Todd Ferryman lost his job at Amazon.com's Breinigsville warehouse after breaking his foot at home. When his foot healed, he was told there was no work for him. He applied for unemployment benefits, which Integrity Staffing Solutions fought, arguing that Ferryman had quit. The hearing's referee...

Todd Ferryman lost his job at Amazon.com's Breinigsville warehouse after breaking his foot at home. When his foot healed, he was told there was no work for him. He applied for unemployment benefits, which Integrity Staffing Solutions fought, arguing that Ferryman had quit. The hearing's referee... (APRIL BARTHOLOMEW / THE MORNING CALL)

Months after she suffered heat exhaustion and lost her job in an Amazon.com warehouse in Breinigsville, Rosemarie Fritchman sat in a small conference room pleading for unemployment benefits of about $160 a week.

Opposing her at the hearing before a state referee, who would decide whether Fritchman was eligible for the benefit, was a human resources agent representing her employer.

The testimony of Gwen Golbreski, the human resources representative, was brief and procedural: "She was terminated for attendance," said Golbreski, who attended multiple hearings involving Amazon warehouse workers that day. "We have a no-fault attendance policy."

Fritchman, 67, remained poised and gave a detailed account about how she struggled working in brutal heat until medical personnel examined her and told her to go home. Following company policy, she provided a doctor's note upon returning to work, and she was still terminated without explanation, she said.

"I did the best I could under those working conditions," said Fritchman, speaking more forcefully in her closing remarks. "I didn't want to end up in an ambulance."

This scene has become commonplace since Amazon opened a Lehigh Valley warehouse in 2010. But the human resources agent is not from Amazon. She works for Integrity Staffing Solutions, a company paid by Amazon to recruit workers who unload boxes, process orders and pack shipments for the giant online retailer.

The temporary staffing firm plays a crucial role in Amazon warehouses around the country, especially during the busy Christmas shopping season. Its relationship with Amazon has made Integrity Staffing Solutions the biggest temporary-employment firm in the Lehigh Valley and one of the fastest-growing agencies of its kind in the country.

Part of its role is fighting to keep its workers from collecting unemployment benefits after they have lost a job at Amazon.

Integrity Staffing Solutions is involved in more unemployment compensation appeal hearings — hundreds per year — than almost all other employers in Pennsylvania, according to a state source with access to the confidential records. It even surpasses Walmart, the state's largest private-sector employer that has more than 50,000 workers in Pennsylvania, the source said.

In the first nine months of 2012, Integrity Staffing Solutions was involved in more than 200 unemployment compensation appeals, the source said. No other temporary-staffing firm in Pennsylvania comes close to that number.

The practice reveals one of the ways Amazon keeps costs down and one tactic used by a temporary staffing firm to win Amazon's continued business. Large employers such as Amazon can bid temporary firms against one another, forcing them to look for ways to contain costs, industry experts said.

The pressure to keep costs down means many who take temporary jobs at an Amazon warehouse hoping it will result in long-term stability and independence instead find themselves jobless and fighting for a public benefit that represents their last financial resort.

The Morning Call attended 23 unemployment compensation hearings this year involving temporary Amazon warehouse workers hired by Integrity Staffing Solutions, including hearings for several employees who lost their jobs following illness or injury. Most workers were fighting for benefits of between $100 and $200 a week.

Advocates for the working poor say the company's aggressive stance on unemployment compensation exploits low-wage earners who need the benefit for food, housing and other necessities while they search for other jobs. The workers are often outmatched in the unemployment process.

"It's plain and simple, [companies are] playing the odds," said Maurice Emsellem, policy co-director of the National Employment Law Project. "A lot of people don't show up and a lot of people don't know the law. They're playing the odds because it helps them financially. Does it cost more to have someone show up to the hearings and win a few or does it cost more to have folks collecting benefits?"

Temporary-staffing experts, on the other hand, say the industry faces unique challenges when it comes to unemployment compensation costs that force firms to carefully monitor all claims, not just as a routine business practice but for their own survival. Precisely how many claims Integrity Staffing Solutions defeats is not public. However, defeating even a small fraction of the claims they dispute can save firms a lot of money, experts say.

"Staffing firms are uniquely susceptible to unemployment insurance claims because people come in and come out," said Edward Lenz, senior vice president for legal and public affairs of the American Staffing Association, an Alexandria, Va., trade association. "We can be disproportionately affected by the nature of our business … . We certainly tell firms [monitoring claims] is part of their proper cost management."

The Morning Call sent questions and requested interviews with both Integrity Staffing Solutions and Amazon.

Integrity Staffing Solutions, which goes by the name ISS in the Lehigh Valley, declined to comment.

"Thank you very much for your inquiry," Integrity Staffing Solutions spokeswoman Megan Couch said. "We don't have anything to offer."

Amazon declined to address its temporary staffing provider's involvement in unemployment compensation disputes. As of July, Amazon had 2,180 workers in its Breinigsville warehouse operation, 1,937 of whom were full-time, permanent employees, Amazon spokeswoman Mary Osako said. Of the full-time workers in Breinigsville, 70 percent began as temporary employees, she said.

The company expected to add 2,000 seasonal jobs in Breinigsville this year, temporarily doubling the size of its local workforce, Osako said.

"Our operations team wanted me to pass on their thanks for the opportunity to comment and that they hope the above helps with your story," Osako said.

HR Ninja

Integrity Staffing Solutions' relationship with Amazon goes back more than a decade. The big client has catapulted the firm from a three-person shop to an industry powerhouse. As Amazon has added warehouses throughout the country to meet growing sales demand, Integrity Staffing Solutions has recruited temporary employees to do the grunt work in Arizona, Delaware, Indiana, Kentucky, Nevada, Tennessee and Virginia, as well as in warehouses in Breinigsville and Hazleton.

The Wilmington, Del., company's president, CEO and co-founder Todd Bavol in 2011 won the Philadelphia region Ernst & Young Entrepreneur of the Year award. At the time, he attributed his company's success to "proprietary technology" for managing large-scale projects.

In a 2009 question-and-answer piece in the Philadelphia Business Journal, he talked about driving a BMW and owning a beach house. Bavol said he hoped to boost his company's annual revenues to $300 million and create a sanctuary for abandoned animals. Wearing a navy blazer and no tie, he is pictured beside his dog Lucy, a black and white Newfoundland.

Bavol, 46, chose "competitive" as the word that best describes him, and said Amazon is the company he admires most because it is a trendsetter willing to take risks.

On the professional networking site LinkedIn, Bavol describes himself as a "visionary CEO … with a passion for making the impossible possible." Posted on the profile are accolades of Bavol from various people, including several of his employees at Integrity Staffing Solutions, his wardrobe consultant and someone who served as his sales coach.

An English major with a degree from the University of Florida, Bavol writes a workforce blog titled "HR Ninja."

In one blog post, he wrote, "At times, complaints can be difficult to hear, but they're most often the best way to ensure the company has the information it needs to make the best possible decisions for the future of the organization."

In 2011, Integrity Staffing Solutions had revenues of $265 million, up 34 percent from the previous year, making it one of the fastest-growing temporary-staffing firms in the country, according to Staffing Industry Analysts, a business research firm in Mountain View, Calif.

Most temporary industry growth is in the technology sector, said Jon Osborne, vice president of research and editorial at Staffing Industry Analysts. What makes Integrity Staffing Solutions' growth stand out, he said, is that it serves the industrial sector, a competitive and crowded field providing low-skilled workers for manual labor.

There are thousands of such companies in the country, and no dominant player. Competition is fierce because it takes little money to start a temporary-staffing business and clients pick one firm over another primarily on price.

"This company is definitely outperforming its peers," Osborne said.

Willful misconduct

Rosemarie Fritchman's experience began like that of many temporary Amazon warehouse workers. She applied for a short-term position hoping it would lead to something better.

"They were the only ones who hired me," said Fritchman, a widow. "Most people think at my age you should be retired and living on a pension. I'm still out there, and it's not that great."

Fritchman, of Walnutport, earned $12.75 per hour packing goods at the warehouse for about a month in the summer of 2011. At the time, federal regulators were investigating workers' complaints about brutal heat that made it feel hotter than 110 degrees in the warehouse some days. Several workers were taken to hospital emergency rooms and Amazon had ambulances and paramedics stationed in the parking lot on hot days that year to respond to workers suffering heat-stress.

Fritchman said she suffered heat exhaustion on Aug. 8, and warehouse medical personnel told her to leave work early after examining her.

Temporary workers at the warehouse accumulate points like demerits for being late, leaving work early or missing shifts. Those who accumulate six points are terminated. Integrity Staffing Solutions policies say points for absences will be erased if the worker provides a doctor's note.

Leaving early that day resulted in Fritchman's third point. She testified that she saw a doctor Aug. 9 who told her she had heat exhaustion and shouldn't work for a few days. She called Integrity Staffing Solutions to explain and offered to bring a doctor's note. A manager told her to bring the note when she was ready to return to work. Before her next shift, Fritchman went to the warehouse to get her paycheck. She offered her doctor's note at that time, and was again told to keep it until her next shift, she said.

Meanwhile, her infractions piled up. Fritchman received a total of three points for missing her shifts on Aug. 9 and Aug. 11, bringing her total to six, which calls for termination.

Fritchman said she reported for her next shift Aug. 15 and was told her assignment had been terminated. She said she left her doctor's note at the warehouse with Integrity Staffing Solutions managers.

Following a termination, the burden of proof in an unemployment dispute is on the employer to show the worker demonstrated "willful misconduct." A state unemployment claims administrator determines if benefits are warranted based on the worker's application for benefits and the company's response.

Integrity Staffing Solutions told the state claims administrator that Fritchman was discharged for absenteeism after being warned about her attendance. Warning an employee before firing them is an important step in proving "willful misconduct," meaning the worker knew what they were supposed to do and chose not to do it.

If that is established, the burden shifts back to the employee to show good cause for the last absence.

A state claims administrator that November determined that Fritchman's heat exhaustion was a good excuse for her final absence and that she was eligible for unemployment compensation.

On Dec. 15, Integrity Staffing Solutions appealed the state administrator's decision, though it did not dispute any of Fritchman's claims.

"We would like to appeal this decision because the claimant Rosemarie A. Fritchman was discharged because he (sic) violated the attendance policy," Jasmine Bond, Integrity's unemployment administrator, wrote in the request for an appeal hearing. "The claimant exceeded the maximum allowable attendance infraction limit."

Integrity's request prompted a Jan. 26 hearing before unemployment appeals referee Mark Brown in a conference room in a Lower Nazareth Township shopping center. Fritchman and the company's representative sat at tables in front of the referee, an arrangement similar to opposing sides in a courtroom.

Integrity Staffing Solutions has a streamlined process for disputing claims. It hires an outside contractor to help with paperwork. Its human resources representatives spend hours at sometimes back-to-back unemployment compensation hearings. In 23 hearings attended by The Morning Call, the staffing firm's representatives didn't call a single witness with firsthand knowledge of an employee's departure. Instead, they relied on attendance reports and performance records in a worker's personnel file, and submitted company policies as evidence.

For instance, Golbreski did not dispute any of Fritchman's testimony about suffering heat exhaustion or bringing in a doctor's note.

"I don't have that information," Golbreski said in response to Fritchman's testimony. "I'm not aware of that."

Participants in an appeal can question one another and Fritchman asked Golbreski if workers sent home early due to health concerns still get demerits. Golbreski responded: "I believe that is correct."

Fight claims, save millions

Fritchman's financial motives were clear. She needed the $160 weekly benefit to pay rent, buy food and put gas in her car.

Companies pay a payroll tax to support the unemployment compensation system. The tax rate is determined in a similar manner to rates for car insurance. A driver with lots of crashes and speeding tickets pays higher insurance rates than one without. Similarly, a company with a lot of employees collecting unemployment insurance pays more than one without. The idea is that a volatile employer puts greater demand on the unemployment compensation system, and should pay more to support it, than a stable employer.

Preventing former workers from collecting unemployment represents money in the bank for the companies that used to employ them.

The very nature of Amazon's business, which requires thousands of temporary warehouse workers during the busy holiday shopping season, would leave it prone to high costs for unemployment insurance. Temporary-staffing firms create a buffer between Amazon and higher unemployment insurance costs because temporary warehouse workers are employees of the agency, not Amazon.

In Pennsylvania in 2011, unemployment insurance rates paid by businesses ranged from 2.7 percent to 10.8 percent on each employee's initial $8,000 in wages. For a company like Integrity Staffing Solutions, which hires thousands of workers in Pennsylvania, the difference between a low rate and a high rate can add up to millions of dollars annually. Pennsylvania keeps the rate for individual businesses confidential.

"The only defensive measure for a company with a highly fluctuating workforce is to more aggressively manage its unemployment compensation process," said Steven Whitehead, an Atlanta attorney who has represented temporary staffing firms since 1988. "If you can justify a reason to not be taxed for someone who is not working, you are allowed to make an argument … . It's the way the system is set up, rightly or wrongly."

Businesses are supposed to safeguard the unemployment compensation system from abuse by claims from ineligible workers. Since its inception in 1935, unemployment compensation was intended to be a safety net for workers who lose their jobs through no fault of their own, not a cushion for those who quit without good reason or get fired for flagrant violations of workplace rules.

Integrity Staffing Solutions made some strong arguments as to why several employees should not be eligible for unemployment compensation at hearings attended by The Morning Call. At 10 hearings, the workers seeking the benefit didn't attend. Those failing to show don't automatically lose their benefits. The hearing proceeds without them and the state referee makes a determination based on the evidence presented.

For example, an employee from Bangor applied for unemployment insurance and was denied by a state claims administrator. He appealed the decision, which prompted a February hearing. On the morning of the hearing, he requested a continuance by phone, which the referee denied. The man did not attend his own hearing.

Integrity Staffing Solutions human resources manager Jeffrey Benner said the man worked full time for one day in September 2011 earning $12.50 an hour. He resigned, saying the commute was too far, Benner testified.

A Schnecksville woman was initially found ineligible for unemployment benefits, which she appealed. She did not attend her February hearing.

Benner testified that the woman worked full time as a packer for 11 days in September 2011. She was suspended Sept. 30 when she failed to provide proof of education within 14 days as required. The woman initially said she had the required education, and later admitted she did not finish high school, Benner testified.

But the claims in dispute were not limited to those who quit without reason or who were fired for good cause. Many people who get sick or injured while working at the Amazon warehouse end up fighting the company to collect benefits.

Since they are temporary workers on short-term assignments, federal laws that protect most workers from being fired for getting sick or injured don't apply. Those laws require 12-months tenure, which most temporary Amazon warehouse workers don't achieve because they are hired on contracts that typically range between 1,200 and 1,500 hours.

Broken foot

Todd Ferryman, 28, of Whitehall Township, began his temporary assignment in the warehouse in November 2010. In March 2011, he fell down the steps at his house and broke his foot. He called Integrity Staffing Solutions to tell them about his injury. They told him they had no light-duty positions and he should reapply when his foot healed.

Ferryman reapplied for his job in May and was told no work was available. So he applied for unemployment compensation. Integrity Staffing Solutions disputed his eligibility, telling the state that Ferryman quit his job.

If Ferryman had been working at the warehouse for a year, he could have qualified for Family and Medical Leave, a federal law that prevents companies from immediately firing workers who get sick or injured. The law requires employers to hold positions open and continue to provide medical benefits for up to 12 weeks. Millions of American workers take such leave annually, but you have to be on the job for a year or longer and have worked 1,250 hours in the past year to be eligible.

Ferryman had only five months' tenure when he broke his foot, so he didn't qualify for the federal protection. Instead, he filed for unemployment compensation and the temporary-staffing firm had a financial interest in preventing him from getting it.

The unemployment claims administrator reviewing Ferryman's application found Ferryman ineligible for benefits, saying he "voluntarily quit because he failed to provide required medical clearance to return to work" and "there was insufficient information provided to indicate whether the claimant had a necessitous and compelling reason for voluntarily leaving the job."

Ferryman appealed the administrator's decision.

"I was discharged due to being unable to work because of a broken foot," Ferryman said in his request for an appeal.

At Ferryman's unemployment compensation hearing, an Integrity Staffing Solutions representative explained injured workers are granted up to 14 days to provide a "certificate of fitness" from a doctor indicating they can return to work without restrictions. Amazon does not allow temporary workers to return to work with restrictions, he said. Those who can't provide documentation allowing them to return to work are terminated, Benner said.

"I was told that I was discharged due to my broken foot," Ferryman told the referee, adding that the staffing firm never told him about a certificate of fitness.

The referee said Ferryman was eligible for unemployment benefits because he notified his employer about his injury and gave the employer an opportunity to accommodate the problem.

Ruth Kull, 51, of Reading, applied for unemployment compensation benefits after quitting her temporary Amazon warehouse job for health reasons. A state claims administrator awarded her benefits, but Integrity Staffing Solutions lodged an appeal, which prompted a March hearing before a referee.

Since Kull quit, she had to show she did so for good reason to maintain her benefits. The temporary-staffing firm was there to argue she was ineligible, which would save the firm money and help keep its costs competitive for clients such as Amazon.

Kull said she started working at the warehouse Dec. 5 as a gift wrapper, a job that required little walking. On Dec. 24 she switched to a packing job, which was also stationary. While working as a packer, she was offered full-time hours. She accepted the new position after being told that she would be terminated if she didn't.

On Dec. 28, Kull said she began working as a picker, a job that involves extensive walking through the three-story warehouse. On March 4, 2011, Kull said she stepped on a bolt and twisted her right foot. She went to on-site medical personnel, who wrapped her foot and asked if she could return to work.

"I have a high tolerance for pain," Kull said, adding that she went back to work.

The warehouse medical personnel — she did not know their credentials — told her to continue working and report back daily until she had three pain-free days. Kull said she never had three pain free days.

"A few days later, I had a lot of pain," Kull said. She went to the medical staff and they gave her aspirin.

"I told them it was impossible to go pain free with all the walking and going up and down stairs," Kull said. She asked if she could be assigned to one floor. Managers told her that was "impossible."

She asked a supervisor if she could go back to packing. They never responded to her request.

"I told them continuous walking was very painful to my foot," Kull said.

Kull said she has heel spurs in both feet and tendinitis in her right foot, conditions she's had for years. She was able to do the packing and gift-wrapping jobs, because those positions required less walking. She couldn't do picking, she said.

The unemployment compensation referee asked if Integrity Staffing Solutions offered Kull another position, such as a packer, after learning about her condition.

Benner responded: "The position was no longer in existence in the building."

Kull said the referee awarded her benefits.

Well hidden

Unemployment hearings occur mostly in secret. While the proceedings are open to the public, only the worker and the employer are notified of them. Unlike in civil or criminal courts, there is no public docket of cases and no public record an observer can use to determine if one company is involved in more disputes than another.

Using Pennsylvania's Right to Know law, The Morning Call requested documents from the state Department of Labor and Industry related to Integrity Staffing Solutions' unemployment compensation hearings. The state denied the request, saying such records were confidential.

The staffing firm unsuccessfully tried to prevent a Morning Call reporter from attending several hearings.

Fritchman's was the first hearing The Morning Call attended. Golbreski objected to the reporter's presence, saying he had no interest in the matter. The referee allowed the reporter to remain.

When the third Integrity Staffing Solutions hearing was about to begin that day, Benner, Integrity Staffing Solutions' human resources manager, arrived and told the referee the company was withdrawing the rest of its appeals for the day.

At a subsequent hearing, Golbreski objected to a Morning Call reporter's presence, saying she just wanted to make sure the former worker realized his name could be in the newspaper if the reporter remained. The worker did not object to a reporter's presence.

At the start of a February hearing, referee Sandra Bloszinsky announced that Integrity Staffing Solutions' representative Benner would not attend.

"When he learned Mr. Soper with The Morning Call was here, he decided not to participate," she said.

George Gonos, a sociology professor at the State University of New York Potsdam who has studied the temporary-staffing industry for 30 years, said staffing firms tend to be secretive about their operations. They work hard to project the image of themselves as matchmakers who bring workers and companies together, and they know which one they have to please to survive — the businesses that hire them, he said.

"They can treat these workers like a disposable commodity, because there are so many more people in line," Gonos said.

Benefits granted

Unemployment compensation referees don't issue immediate rulings after listening to evidence. Instead, they close the hearing and send their decisions in the mail. The decisions are not available to the public.

With the status of her benefits in limbo, Fritchman was worried she would fall behind on her rent and lose her home. She still had her deceased husband's pension from Bethlehem Steel but needed to supplement her income to cover her bills.

Within a few days of her hearing, Fritchman got her letter.

The referee granted her benefits.

Fritchman said she was relieved but frustrated that she had to endure the cumbersome process.

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